The historic Lord Baltimore Hotel sits a block away from the Sheraton Baltimore City Center, but less than a week after the 1926 landmark celebrated a multimillion-dollar restoration, the owners of the aging Sheraton on Fayette Street warned of mass layoffs and a potential shutdown.

Baltimore's hotel market is at a crossroads as investments pour into properties new and old amid a nationwide pickup in business and leisure travel. As new hotels open, older properties scramble to remain competitive in a market in which demand for rooms remains healthy but has yet to rebound to pre-recession levels.

"This is a street-corner market, and developers always think they can do better than the existing hotels around the street corner," said Jan Freitag, a senior vice president with Smith Travel Research.

A few will thrive. Others will muddle along. Some might not survive. Little is guaranteed in high-stakes world of hotel investing. Freitag called it a circle of life for hotels.

Projects abound in and around downtown. About 400 new rooms were under construction last year in downtown Baltimore, according to the partnership.

They include a 208-room Hyatt Place in Harbor East and an 18-room boutique inn in Mount Vernon, both expected to open this fall. In the downtown area, a La Quinta Inn & Suites and a Crowne Plaza hotel also are under construction.

Further down the line, plans for hotels close to both the University of Maryland and Johns Hopkins hospital complexes are in the starting phases. And Under Armour founder Kevin Plankis floating a proposal for hotel with a pool, whiskey bar and ballroom at the long-neglected City Pier in Fells Point.

With so many hotels on the way, developers are convinced their locations and amenities will make their properties stand out.

"We look at the market, of course, but we're really just focused on our property," said Shawn Batterton, who is working on Plank's project in Fells Point. "We think we're going to make a really fantastic, unique product that's going to be different from anything else."

Development of new hotel rooms is happening faster in the Baltimore region than nationwide. Projects in the construction pipeline are expected to up by 11 percent to the local room supply, compared to 7 percent across the nation, according to a forecast from Lodging Econometrics.

And that's after the supply of rooms in the Baltimore-Towson area grew by 12 percent between 2008 and 2013, according to Smith Travel Research data.

With the supply of rooms growing amid stagnant local demand, the market hasn't kept pace with the growth in room prices and revenue nationwide.

Nationwide, occupancy rates have grown slowly but steadily since 2009, pushing the average daily room rates up 2 percent and revenue per available room up 6 percent between 2008 and 2013, according to Smith Travel Research.

In the Baltimore-Towson area, however, occupancy rates have not recovered as well, while the average daily room rate dropped 6 percent and revenue per available room fell 2 percent over the five-year-period.

In 2013, the region's occupancy rate was 63.7 percent, lower than in the past two years and 2007. Still, it remained better than the national average of 62.4 percent.

"The hotel community is in very good shape, much better than it was two or three years ago," Noonan said. "Things are really getting stronger for us, which is great."

However, those figures also could help explain the struggles at the city-owned Hilton — which kept almost all of the occupancy taxes it generated last year to make debt payments — and at the Sheraton City Center.

The 700-room Sheraton has closed one of its two towers and, just last week, notified the state it would lay off 110 workers by the end of May — and possibly 160 if it closes.

An official with the union representing workers at the hotel, which opened in 1967, said the Sheraton has struggled to compete with new properties as tourism and business shifted toward the Inner Harbor and the Convention Center. Roxie Herbekian, president of Unite Here Local 7, also cited a lack of investment in the dated property by the owners, who may convert the remaining tower to a limited-service hotel.

Neither the Blackstone Group, which owns the hotel, nor its manager, Interstate Hotels & Resorts, responded to requests for comment.

Even if a market's overall metrics aren't fantastic, hoteliers can see opportunity when new development —such as Harbor East — changes the dynamic within a city, said Tim Southard, an Atlanta-based senior vice president in commercial real estate firm JLL's hotels and hospitality group.

"They look at that and say maybe overall [revenue per available room] in Baltimore is weak, but I can put a top-branded hotel in this location and I can outperform the market," said Southard, adding that developers are optimists. "It's potentially capturing unaccommodated demand because there's not a hotel in that specific location with that specific brand, and it's potentially stealing market share from other hotels that are either in inferior locations, or [are] inferior brands, or are a functionally obsolete product."

Ken Finkelstein president of Hyatt Place Harbor East developer Englewood LLC, said he chose the location carefully and considers Baltimore a "solid market," but it likely isn't strong enough to support a lot of new projects.

"It can absorb a certain amount of growth, but people shouldn't get too carried away," he said. "You've got to kind of pick your spots."

The 750-room Baltimore Marriott Waterfront, which opened in Harbor East in 2001, has benefited from its location. The hotel had occupancy rates "in the 70s" last year, largely from group bookings, said Julie Codus, director of sales and marketing.

Even so, she said, the tight market meant it couldn't rest on its laurels: the hotel spent $5 million this winter to overhaul its bar and restaurant, now named Apropoe's in homage to Edgar Allan Poe. Other hotels, such as the Hyatt Regency, also are renovating.

"With the new inventory and the new hotels and new restaurants, you really have to keep up with what's going on," Codus said. "We really needed to step up our game."

Baltimore's relatively cheap real estate also makes it an appealing place for new investment.

Rubell Hotels, a Miami-based company owned by a family of art collectors, scooped up the 440-room Lord Baltimore hotel — a Radisson on the verge of closure — for $10 million last year. Modus Hotels relaunched a made-over Brookshire Suites in February, after buying the 97-room property at a 2012 bankruptcy auction for $7.85 million.

"It's a question of buying in at the right price, doing the right renovation," said Mera Rubell, a partner in the family business. "We go where the opportunity is invisible, because it goes without saying when the opportunity looks invisible, it's going to cost a lot less."

Visit Baltimore's Noonan said he expects a strong tourism season in 2014, with the opening of the casino this summer increasing demand for rooms.

Rubell, whose property is in the more traditional downtown, said she is also bullish on Baltimore, given its world-class universities, top sports teams, art institutions and location on the well-trafficked Northeast corridor. She said she expects the activity in Harbor East to spill over soon enough.

"I don't know if there are too many rooms," she said. "I think we need more tourists."